A duty is often owed on components imported into a trade territory (e.g., a territory of, and/or within, a country or group of countries).
For some trade territories, the import duty is deferred and reduced (possibly to zero, i.e., waived) if a condition (which may be defined by one or more laws) is satisfied prior to the end of a predetermined period of time (i.e., a deadline) after the component is imported. For example, for some trade territories, the duty may be deferred and reduced (possibly to zero, i.e., waived) for any components that are incorporated into a product that is exported from the trade territory prior to the deadline. See for example, a provision referred to as inward processing as defined by Article 114-129 ZK and Article 536-550 ZK-DVO of European Customs Law. The duty may also or alternatively be deferred and reduced for any components that are incorporated, prior to the deadline, into a product having a classification that falls within a predetermined group of classifications, e.g., tractors. See for example, a provision referred to as processing under customs control as defined by European Customs Law. The duty may also or alternatively be deferred and reduced for any components that are scrapped prior to the deadline.
The opportunity for deferral and reduction of duties provides economic benefits to entities that import components. In view of this, entities often wait until after the deadline to determine whether a duty is owed on any components that have been imported. At that point, it is customary to determine the components for which the duty is not reduced, and to then determine the duty owed on such components.